Review the steps outlined in http://www.howtobrew.com/ . You might look at merging the mash with the lauter by the use of a carborator or false bottom. I personnaly use ss screen hose. But examine your whole process from cracking grains through the boil. I'm betting that it's your mash process but without being there when you brew, it's a guess. Hope this helps.

A low efficiency (especially this low) is typically due to an insufficient crush. Try a tighter gap or crushing twice. There are other factors, certainly, but that's a big one. Also, if you are fly sparging, channeling can be an issue. Trying a batch sparge with your system can eliminate the channeling variable. If you are batch sparging, a good stir at the beginning of the sparge is crucial to good efficiency.

The cooler takes a little while to warm up, maybe 10-15 minutes, during which time it's sucking heat out of the mash. Try pre-warming the tun with some hot water. give the mash a stir at about 10 minutes in and check the temperature. If it's a little low, add some boiling water to bring it to temperature.

If you can avoid adding the break material to your fermenter, you may see some flavor improvement, but it's not a make or break issue for flavor or clarity. Recirculation will help clarity a bit, but it won't necessarily have much effect on the clarity of the final beer. I just recirculate until the chunks are out.

Are you using Whirlflock or Irish moss? These can help clarity a lot, especially if you use them correctly: rehydrating Irish Moss prior to use or adding Whirlflock in the last 5 minutes of the boil.

Cold crashing, to drop the yeast and proteins, using a strongly floculant yeast, like WLP002 or S-04, and maybe even a protein rest, can also help beer clarity.

Are you using a big cooler relative to you mash volume? My cooler only loses a degree or 2 during the mash (once the temperature stabilizes, which can take 10 or 15 minutes, as I mentioned). I use I 20 qt tun, which can be a little tight, but I''ve heard of brewers using 56 and 72 qt tuns having problems holding temperature with smaller beers.

I always take a gravity reading at the end of the sparge. That reading is needed to determine how long you need to boil and whether you need to change your hop additions to accomadate a different beer than you were expecting.

During the boil the gravity changes in direct proportion to the volume. What I mean is that none of the sugar evaporates, just the water, so if you start with 7 gallons at 1.050, you have 350 total points (7x50). When it's boiled down to 6 gallons you still have 350 total points, for a gravity of 1.058 [350/6=58]. At 5 gallons it will be 1.070.

LHBS have a reputation of a poor crush. The conspiratorial reason is that they want to sell more grain, but the other possibilities are that they want to make sure you don't get a stuck mash or that someone was messing with the settings. It may work okay if they let you pass it through a second time, or maybe they'll tighten the gap a bit for you.

If your temperatures are staying above 140-145oF or so, it probably won't hurt your efficiency much or cause off flavors. You'll just need to learn what kind of body and final gravity you get with certain starting temperatures and move up and down accordingly until you get the beer you want. Making higher alcohol beers that require more grain will help temp stability, too. 48qt Ice Cube coolers seem popular as a midpoint between plenty of room and too much heat loss.